Large commercial buildings can cost many tens of millions or even hundreds of millions of dollars, and the financing for these projects is very complex. The specialist mortgage brokers Marlborough who operate in the sector need to have a highly detailed understanding of all aspects of the financing, including the detailed business plan for the project.
The broker will need to understand in detail what type of tenants be developer and signed up to long term leases, and how secure these contracts are. This will require the broker to get a detailed understanding of the tenants and their own business models, and while this will be fairly straightforward for high profile anchor tenants such as a major government department it won’t be nearly so straightforward for smaller companies such as startups and other more obscure Enterprises.
Once the broker has got a good handle on the long term security of all of the tenancy agreements then the broker can then help the developer to assemble a business case for the financing of the construction. The broker will need a good working knowledge of the construction process, particularly as it relates to the milestone payments required at the various stages of the building project.
For very large projects the broker will generally need to organise financing from a number of different lenders, and this can include commercial Banks, non Bank lenders and even high net worth individuals. In many cases in New Zealand the broker will have to go offshore for financing, because the project is just too large or risky for the much smaller New Zealand backs. When it comes to mortgage brokers Nelson is the best place to be.
The important part of any financing arrangement is to make sure that just the right amount of financing arrives at just the right time, because in general the financing will be at a high interest rate and will be very expensive if it arrives before it is actually need it. Similarly if the financing arrives late and the project is held up in this also can be very expensive.
Generally large multi storey commercial developments have their tenants lined up in a very early stage in the project, and often it will take only one significant anchor tenant to convince financiers that the risks are reduced and therefore interest rates can be reduced accordingly. The process of obtaining a large and respected anchor tenant is obviously very important for the financing.